Operations started in Shanghai

History
|

ÖBERG, GUSTAF (PORTRAIT, 1899)

Share this page

Today China is a vast market for Ericsson telephones. One person who was aware of this vast potential was Gustaf Öberg, who lived in Shanghai and was Ericsson's first general agent in the country. In a letter to Ericsson dated September 19, 1907 he wrote "with your excellent manufacturing and the recognition and the grasp on the world market that you have achieved, Ericsson should become one of the largest in the world, a world power."

Ericsson began selling telephones and telephone equipment in China in the early 1890s. These sales were conducted via Schiller & Co., which was run by Gustaf Öberg. Although Öberg traded in all kinds of goods, including coal, he realized the potential of Ericsson phones in the international trading and maritime center of Shanghai. There was a problem, however. The British-owned Oriental Telephone Company held the telephone concession for Shanghai, meaning that Ericsson?s initial sales of telephones were limited.

In a letter to Ericsson's office manager Axel Boström in 1899, Öberg described the lengthy and complicated process of doing business in China.

"Courtesy demands the exchange of several polite letters to establish the time, the place and the conditions for a meeting. That having been accomplished, the person with whom one is meeting must journey to the meeting place in a manner consistent with his standing in a sedan chair, on horseback or on foot. Then, after a lengthy exchange of greetings, each party tries to exceed the other in courtesies, with the result that it takes considerable time to get to the subject for the meeting."

Öberg also noted that this cumbersome means of doing business wasted both time and money. Although time was not an important concern for the Chinese, money was. If Chinese businessmen were to realize how much money could be saved by making a single telephone call, thus eliminating a costly meeting, the future for the telephone industry would be bright.

The British company that held the telephone concession was poorly managed. When only a few hundred telephone subscriptions had been sold in this important trading center when the concession expired in 1900, Gustaf Öberg saw his chance. He began to conduct an aggressive campaign to transfer the concession. The campaign was successful, and a new company, the Shanghai Mutual Telephone Company, was formed by the mayor of Shanghai. Öberg was appointed president of the new company.

With Ericsson's best wishes, he immediately began building a telephone exchange in Shanghai. Öberg had successfully mounted the campaign, and word of mouth, together with lower telephone charges, quickly resulted in many new subscribers.

Strengthened by this success, the company began building a new central exchange and offices in 1906. Gustaf Öberg wrote proudly in a letter that "we have commenced construction of the new central telephone station across the street. It will be 130 by 60 English feet and seven stories high."

Öberg followed the building's construction from start to finish, photographing each stage for his private photo album.

At this time, Ericsson was expanding rapidly all over the world, and there was a tendency within the company to regard China as a small and remote market. During one period, Öberg received no replies to letters, telegrams and orders. In April 1907, he wrote to Axel Boström who had become president of Ericsson. ?Enclosed please find copies of letters sent over the past 12 months to which no replies whatsoever were received.? Eventually, Öberg was forced to order materials from other companies. When he finally received a letter from Boström in the autumn of 1907, he was scathing in his criticism. "I had dreamed of L M Ericsson becoming a world power. You have certainly aspired to that position, although you have always attached too little importance to replying to letters from small customers."

Ericsson improved, however, and relationships subsequently developed to the satisfaction of both parties.

And Ericsson became exactly what Öberg had dreamed about - a world power.

Author: Thea Oljelund

Axel Boström, president of LM Ericsson & Co, on business trip to England.